First-time buyers

Your first mortgage, explained before you commit to it.

Nobody explains the first one to you in the right order. The deposit is discussed for months; the arrangement fee, the reversion rate and the money you need on completion day that is not the deposit tend to arrive in week three of a purchase.

This page sets out what a lender will ask, what it will cost, and what to have ready — before an estate agent asks whether you are in a position to proceed.

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A hand holding up a single key in front of the door of a home.

Definitions

Whether you are a first-time buyer is a stricter test than it sounds.

For tax purposes, a first-time buyer is someone who has never owned a freehold or leasehold interest in a dwelling — anywhere in the world, at any time, by any route. That includes a share inherited from a relative, a property owned jointly with a former partner, and a home owned abroad before you moved to the UK.

It also applies to everyone on the purchase. If you buy jointly and one of you has owned before, the purchase is not a first-time buyer purchase, and the relief that applies to the tax on it is lost for the whole transaction rather than for half of it.

Lenders use their own, looser definition for product eligibility — usually meaning you do not currently own a property — so it is entirely possible to qualify for a first-time buyer mortgage product and not qualify for the tax relief. They are separate questions and are worth asking separately.

Property tax on a purchase is devolved: England and Northern Ireland, Scotland and Wales each run a different regime, with different thresholds and different relief.

The tax is payable from your own funds on completion. It cannot be added to the mortgage, so it has to be saved for alongside the deposit.

Overhead view of two people either side of a wooden table, one working at a laptop beside loose papers and a pen.

Preparation

What to have in order before you speak to anyone.

None of this is difficult, but each item takes days rather than minutes to obtain, and an application stalls on whichever one you have not got.

Identity and address

Photographic identification — a passport or a UK driving licence.
Proof of your current address, and of any address you have held in the past three years.
Registration on the electoral roll at your current address, which is the single cheapest improvement to a thin credit file.

Income

Recent payslips, and a P60 for the last full tax year.
Evidence of anything variable — bonus, overtime, commission or shift allowance — going back far enough to show a pattern rather than a spike.
If you are self-employed, tax calculations and tax year overviews rather than payslips.
Written confirmation of any income that is not from employment, including benefits, maintenance or rental income.

Deposit

Bank statements showing the money accumulating, not simply sitting there — lenders trace the source of the deposit as an anti-money-laundering requirement.
For a gifted deposit, a letter from the giver confirming it is a gift and not a loan, and that they retain no interest in the property.
Evidence of any Lifetime ISA holding, and the timing of a withdrawal, which has its own rules and penalties.

Outgoings and credit

Your statutory credit file from more than one agency — lenders do not all use the same one, and the files disagree more often than people expect.
A list of every credit commitment with its monthly payment and remaining term, including car finance, buy-now-pay-later and student-style agreements.
Recent current account statements, which lenders read for gambling, undisclosed borrowing and returned direct debits.

Budgeting

The costs that are not the deposit.

These land between offer and completion, largely in the last fortnight, and are payable from savings. Budgeting for the deposit alone is the most common way a first purchase runs short.

Property purchase tax

Stamp duty land tax in England and Northern Ireland, land and buildings transaction tax in Scotland, land transaction tax in Wales. Each has its own thresholds and its own first-time buyer treatment. Payable on completion, from your own money.

Conveyancing

Your solicitor's fee, plus disbursements: local authority searches, water and drainage, environmental, Land Registry fees and the electronic transfer of funds. The disbursements are not optional and are quoted separately from the fee.

Survey

Separate from the lender's valuation and paid by you. The level you choose should reflect the building's age and construction rather than its price — an older property is where a fuller survey earns its cost back.

Mortgage fees

The product or arrangement fee, and any booking fee. Some can be added to the loan; a booking fee usually cannot and is often non-refundable even if the purchase falls through.

Buildings insurance

Required from exchange, not from completion — from the moment contracts are exchanged the risk is generally yours, even though you do not yet own the property or hold the keys.

Moving and the first month

Removals, any overlap of rent and mortgage, connecting utilities, and the immediate cost of a property that has been empty. Not mortgage costs, but they compete for the same savings.

Routes in

Ways onto the ladder other than a larger deposit.

Each of these is a real structure with real trade-offs, and none is universally available — eligibility varies by scheme, by region and by lender. The right question is which one your circumstances actually fit.

Low-deposit mortgages

Products at the top of the loan-to-value range exist across the market, including under the government's mortgage guarantee arrangements. The rate is higher than at lower LTVs and the choice of lenders is narrower, but the route is open.

Shared ownership

You buy a share of a property and pay rent on the remainder to the landlord, usually a housing association. The mortgage is only on your share, so the deposit needed is much smaller. Service charges apply, and buying further shares — staircasing — has its own costs.

Lifetime ISA

A savings account that attracts a government bonus on contributions, usable towards a first home within a property price limit. There are rules about how long it must be open and penalties for withdrawing outside the permitted purposes, so the timing matters.

Joint borrower, sole proprietor

A family member's income supports the borrowing but they are not an owner of the property. That keeps your first-time buyer status intact for tax and avoids the additional-property surcharge that would apply if they went on the title. Not every lender offers it.

Gifted deposit

Money given, not lent, by a close family member. Lenders will want written confirmation that no repayment is expected and no interest in the property is retained, and will trace where the money came from before that.

Right to Buy and First Homes

Discount schemes for eligible tenants and, in some new-build developments, for eligible local buyers. Both come with conditions attached to the property and to any later resale, and both need a lender that accepts the specific scheme.

Sequence

The order that avoids wasted effort.

Most first purchases go wrong at step one or step two — either an offer made before the borrowing was established, or a property found before the money was.

Establish the range before you view anything
A realistic maximum and a comfortable figure, which are rarely the same number. Viewing above your range is how people end up stretching to a payment they resent for five years.
Get an agreement in principle
A lender's indication, based on a soft credit search, of what it would lend. Estate agents ask for one before they take an offer seriously, and it surfaces credit problems while they are still fixable.
Offer, and instruct a conveyancer immediately
The legal work is the longest thread in the whole process. Instructing on the day the offer is accepted, rather than the week after, is the cheapest time you will ever buy.
Full application and valuation
The documents you gathered go in as a complete package. The lender values the property and underwrites the case; questions at this stage are normal and are answered fastest when the file is already complete.
Offer, exchange, completion
The formal mortgage offer is issued to you and to your solicitor. Exchange makes the contract binding and fixes the completion date; completion is when the money moves and the keys are released.

Questions

First-time buyer questions.

How much deposit do I actually need?

Most lenders will want at least five per cent of the purchase price, and the products available at that level are limited and priced accordingly. Ten per cent opens up materially more choice, and the improvement continues at fifteen and twenty-five. It is worth knowing where the next band sits before deciding you have saved enough — a small additional amount at the right moment can be worth far more than it looks.

How much can I borrow as a first-time buyer?

A lender starts from a multiple of your verified income and then applies an affordability assessment that can reduce it — testing your income against your credit commitments, an allowance for household spending, and a rate higher than the one you would pay. Because lenders treat bonus, overtime, commission and childcare differently, the maximum can vary substantially between them on identical figures.

Does a Help to Buy equity loan still exist?

The equity loan scheme closed to new applicants. What remains for first-time buyers is a mix of low-deposit lending, shared ownership, the Lifetime ISA, discount schemes such as Right to Buy and First Homes, and family-supported structures such as joint borrower sole proprietor. Which of those is open to you depends on where you are buying and on your circumstances.

Can my parents help without going on the mortgage?

Yes, and there are several ways. A gifted deposit is the simplest. A joint borrower sole proprietor arrangement lets their income support the borrowing while leaving them off the title, which protects your first-time buyer tax treatment. Some lenders also accept a family member's savings or property as additional security. Each has different consequences for tax and for them, and is worth taking advice on.

Should I get an agreement in principle before I start viewing?

Yes. It costs nothing, usually involves only a soft credit search, and estate agents in most markets will not put an offer to a seller without one. Its more valuable function is diagnostic: if there is something on your credit file you did not know about, you want to find it now rather than after you have fallen for a flat.

What credit score do I need?

There is no single score and no published threshold, because each lender scores against its own model and they weigh things differently. What is consistently true is that being on the electoral roll, having some credit history rather than none, keeping balances well below limits, and having no missed payments in the recent past all help. Check your file at more than one agency, because they hold different data.

Is a new-build different?

In several ways. Offers need to last long enough to cover a build programme that may slip, some lenders cap the loan-to-value on new-build flats specifically, and incentives from the developer can affect the valuation the lender is willing to use. It is a case where knowing the lender's position before you reserve is worth a great deal.

Keep reading

Mortgage repayment calculatorWork out a monthly repayment, total interest and loan to value, and see which of the four inputs actually moves the figure.

Mortgage adviceHow UK residential mortgages are structured — repayment and interest-only, fixed, tracker, discount and offset — and which situation each one suits.

Help centrePlain answers to the questions that come up most often across an application, grouped by the stage you are at.

Your home may be repossessed if you do not keep up repayments on your mortgage. Figures shown on this site are illustrative estimates and do not constitute advice or an offer of credit.

Next step

Find out what you can borrow before you view.

Fifteen minutes with an adviser gives you a borrowing range you can take to an estate agent — and a list of what to sort out first if anything needs sorting.

Get your borrowing range Run the numbers first

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